Korean beef safeguard to be triggered imminently

Key points

• Under the Korea-Australia Free Trade Agreement (KAFTA), annual safeguard provisions apply to Australian beef.
• It’s anticipated that the safeguard will be triggered in the next few days.
• Strong demand in Korea for Australian beef (favoured over US beef for health and safety reasons) has led to the safeguard being fully utilised since KAFTA came into force.
• In 2018, the tariff applicable for Australian beef entering Korea will rise from 26.6% to 40%, once 167,327 tonnes of Australian product has cleared Korean customs.

As a result of safeguard being triggered, the revised tariff of 40% will be applied on imports from Australia from the trigger date until 31 December 2018. The US is the major competitor to Australia in the Korean imported beef market, and their tariff will remain at 21.3% due to a greater safeguard volume, under the Korea-US Free Trade Agreement (KORUS).

The tariff differential between the US and Australia will now expand from 5.3% to 18.7%, creating further challenges for Australian beef in an already highly-competitive market (see MLA article Korean beef safeguard for more details on the safeguard and its implications).

Korean consumers favour Australian beef

While immediate demand for Australian beef may be influenced by the higher tariff and subsequent increase in cost, fundamental consumer preference for Australian beef will remain unchanged. MLA conducted an annual consumer tracker survey in Korea, which shows:

• ‘Country of origin’ is extremely important for Korean consumers
• Australian beef is the most favoured among all imported beef and regarded the most superior, safest to eat, and a family favourite.

MLA Korea’s Country Manager, Charlie Ko, said Korea is a tough competitive environment, especially in the imported chilled beef sector.

“The US now occupies 58% of market share (September 2017 to August 2018) – up 8% points from the same time last year. However, consumer and trade support for Australian beef remains strong,” Charlie said.

“MLA has recently launched a new ‘Oh! Ho!’ campaign to promote the great taste of Australian beef through TV and various other media.”

View the TV advert here.

*  (Source: MLA Global Consumer Tracker Korea, 2014, 2015, 2016, 2017 and 2018)